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Legislature passes property insurance package

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The measure eliminates Florida’s one-way attorney fee provision that favors homeowners in property insurance disputes and prohibit property owners from assigning their insurance benefits to a third party

Florida CapitolThe Florida Chamber of Commerce was applauding, and the Florida Justice Association deeply concerned, after Florida lawmakers approved another round of property insurance reforms to conclude a two-day special session.

The House voted 84-33, with Democrats opposed, on December 14 to give final approval to SB 2A, a measure that includes a heavy dose of “tort reform” and appropriates $1 billion in subsidized reinsurance for private companies.

“The Florida Chamber applauds Gov. Ron DeSantis and Florida’s House and Senate leaders for their continued efforts to stabilize Florida’s property insurance market and protect Florida’s consumers from hurricane taxes, diminishing coverage options and increasing affordability challenges,” CEO Mark Wilson said in a statement.

DeSantis signed the measure December 16.

“The issues in Florida’s property insurance market did not occur overnight, and they will not be solved overnight,” DeSantis said. “The historic reforms signed today create an environment which realigns Florida to best practices across the nation, adding much-needed stability to Florida’s market, promoting competition, and increasing consumer choice. I am thankful the Legislature answered the call for meaningful reform.”

The measure eliminates Florida’s one-way attorney fee provision that favors homeowners in property insurance disputes and prohibit property owners from assigning their insurance benefits to a third party, a practice known as AOB.

Sen. Jim Boyd

Sen. Jim Boyd

SB 2A “will provide reasonable guard rails for insurance companies against frivolous litigation and fraudulent claims that drive up rates for everybody,” said the sponsor, Sen. Jim Boyd, R-Bradenton.

The reforms are the Legislature’s response to figures that show Florida accounts for 7% of all property insurance claims, but generates 74% of all property insurance lawsuits.

“The passage of Florida Chamber-backed Senate Bill 2A protects Floridians by making significant strides toward long standing Florida Chamber priorities, specifically reining in Florida’s lawsuit abuse problems, eliminating cost drivers ripe for fraud such as assignment of benefits, and eliminating future hurricane taxes by taking steps toward returning Citizens Property Insurance Corporation back to the insurer of last resort,” Wilson said.

Democrats, consumer advocates, and the Florida Justice Association reminded lawmakers that the one-way attorney fee provision was enacted to level the playing field for homeowners who are forced to sue when an insurance company improperly denies a claim.

FJA Property Insurance Section Vice Chair Ron Haynes noted that lawmakers in recent years imposed various litigation reforms, including a pre-suit notice requirement, but consumers continue to face rising premiums and lack of availability. Critics also questioned the need to further limit a consumer’s access to justice when the latest figures show property related lawsuits are declining 20%.

“Despite multiple broad-reaching property insurance reforms passed by industry supporters in the past three sessions, there have been minimal improvements to the insurance marketplace that actually benefit consumers,” Haynes said.

Lawmakers cited figures that show Florida’s average annual property insurance premium, $4,000, is three times the national average.

A Northwest Florida couple who identified themselves as conservative Republicans testified against the reforms. They said they are still fighting their insurance company after Hurricane Michael destroyed their home in 2018. The latest round of reforms would have left them defenseless, they said.

Haynes agrees.

“Unfortunately, this round of reforms is a massive overcorrection that takes away homeowners’ property rights and leaves Floridians at the mercy of their insurance company,” he said. “The new roadblocks this legislation creates for consumers treated unfairly by their insurance companies will yield one result: a new popular roof color for homes across Florida — blue plastic.”

The reforms would also require 1.1 million customers of Citizens, the state-run property insurer of last resort, to obtain flood insurance, and switch to a private insurer that offers premiums within 20% of their existing rate.

Homeowners would be required to file an initial claim within one year of the loss instead of two, and to obtain a breach of contract judgment before prevailing in a bad-faith claim.

Insurance companies would have less time to pay or deny a claim, face discipline for abusing the claims process, and face state reviews of their practices after a major disaster. Insurers would also be forced to offer a discount to customers who agree to submit to binding arbitration.

Democrats offered a reform package that would have mandated rate reductions every time lawmakers enact reforms, but the measure failed to get a hearing.

During one committee stop, critics pressed Insurance Commissioner David Altmaier to predict when the reforms would translate to lower premiums.

“I think the provisions that are in this bill will go a long way toward stabilizing our market,” Altmaier said. “The bill is going to go a long way in mitigating the rate increases that we have been seeing.”

 

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